Congress finds buffer to CAG loss figures

NEW DELHI: The Supreme Court's 2G judgment , which cancelled 122 spectrum licences and ordered their auction , was never meant to be an "auction only" prescription for allocation of natural resources other than spectrum , stated a bench of Chief Justice S H Kapadia and Justices D K Jain , J S Khehar , Dipak Misra and Ranjan Gogoi on Thursday.

"The recommendation of auction for alienation of natural resources was never intended to be taken as an absolute or blanket statement applicable across all natural resources ,but simply a conclusion made at first blush over the attractiveness of a method like auction in disposal of natural resources ," the bench said. It said the court would not interfere with the executive's prerogative to select the means for distribution of natural resources unless it was found to fail the twin tests of "fairness and non-arbitrariness" in the light of Article 14 of the Constitution.

The binding opinion of the courtwas pouncedupon by the government as a riposte to the Comptroller and Auditor General's censure for giving away 2G spectrum and coal blocks without inviting competitive bids. Union ministers Kapil Sibal and Salman Khurshid rushed to welcome the court's opinion , while Congress leadership hoped that it may have finally found a buffer against CAG's estimates of loss to the exchequer (in the 2G case ) and undue gains to private players (in Coalgate).

Giving its opinion , the court did hold that auction should be the preferred mode in case the objective of allocation of natural resources was revenue maximization . However , it should not take away from the relief in government circles . The UPA leadership has defended its decision not to invite competitive bids on the ground that it was guided by considerations other than revenue maximization — cheap telephony in the case of 2G and cheap power and infrastructure in Coalgate.

In fact , even the court said that holding auctions could sometimes be contrary to economic logic as "very often , exploration and exploitation contracts are bundled together due to requirement of heavy capital in the discovery of natural resources" . It also said auction method was also susceptible to abuse , as it could be manipulated through cartelization.

Likewise, it said that in certain situations common good could not be best served by revenue maximization. The court said the Constitution did not bind the government to auction for allocation of natural resources ,stressing that Article 39B merely talked about "distribution" : a generic term which could not be construed to mean any particular mode.

There also, the court said that holding auctions could sometimes be contrary to economic logic as "very often , exploration and exploitation contracts are bundled together due to requirement of heavy capital in the discovery of natural resources". It also said auction method was also susceptible to abuse , as it could be manipulated through cartelization.